If you have enough to pay for everything you need, than you’re probably asking yourself why worry and put money aside each month?
There are a variety of reasons for saving money. Different people save for different reasons. Here are a few reasons that you may consider saving your money for:
Build an Emergency Cushion
You never know when your circumstances will change. You may get laid off, become seriously ill and unable to work or may need to relocate in a hurry.
It’s recommended to keep a fund that can support the basic needs and expenses of your family for a transition period of six months.
How much money is that exactly? That depends on your family’s size and living style. Sit down with your spouse and set up a goal.
Don’t get hung up if you can’t put aside enough right away. It may take a few years to build, but even a month or two is a lot better than nothing.
Remember – it’s your family’s rescue wheel in case of unexpected emergency to keep you afloat.
Save for Unexpected Maintenance and Future Improvements
Similar but much smaller than an emergency fund, set up another fund to cover all those unexpected maintenance expenses. It could be an unexpected car repair, A/C failure, a leaking water heater, or any major appliance that went dead without prior notice.
Such fund should have around $1,000 – $2,000 in it.
Save for Retirement
When it comes to retirement, the name of the game is time. In order for you to have a considerable amount of money when you retire, you need to let the money work for you, and that can be achieved only over long periods of time, as interest rate accumulates with each passing year.
Your goal should be to contribute at least 10% – 15% of your gross income, and the sooner you start saving, the less you will need to save in the future.
If you find it hard to put aside 15%, than at least match up what your employer is saving for you.
Save for a Down Payment for a House
If you plan to buy a house some time in the future, you should start saving for a down payment. The larger the down payment is – the lower your mortgage interest rates and insurance rates will be. You will also have a far better negotiating power.
Save for a New Car
Buying a car (or anything else) with credit or via leasing is always more expensive than paying cash for it.
Even if you can save only half of your next car will cost, you’re still much better off like this. Not only will your car payments be much lower, you’ll probably be able to negotiate a better price in the first place if you put a considerable down payment.
Save for Education
Education is very expensive these days. Each year more and more people return for a higher degree or improvement course. You should also consider saving for your children’s education, as they will need all the help they can get.
Save for a Vacation
Paying for a vacation with credit or a loan is a mistake. Paying for a vacation 3 years after your back can easily ruin your memories and the good feeling left after your back. It’s much better to save in advance for things like vacation, presents and all the rest of the fun stuff.